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Outlook 2012: Merger [Xstrata/Glencore] creates world’s largest resource company – by Jenn Lamothe (Sudbury Star – March 30, 2012)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

“But, let’s remember, Sudbury still has enormous geological potential, is
polymetallic — copper, platinum group metals, cobalt and others — in addition
to nickel, has established mining infrastructure, skilled workforce and is
one of the top, politically risk-free and mine-friendly jurisdictions in a
resource-starved world.” (Stan Sudol – Mining Analyst/Columnist/Blogger)

Though the talks of a merger between two enormous mining giants has been going on for many years in secret, it wasn’t until Feb. 7 that mining company Xstrata and commodities dealer Glencore agreed to a $90B US merger that will create the world’s fourth largest natural resources company.

The combined company will control a chain of businesses from mining to refining, storage and shipping of basic commodities like coal, copper and corn.

Under the terms of the deal, Xstrata shareholders would receive 2.8 Glencore shares for each of their shares. That represents a premium of 15.2% based on recent closing prices. Glencore already had a 34% stake in Xstrata.

The merger is projected to yield cost savings of $500 million in the first full year, primarily in marketing. It will also give the combined company greater leverage to borrow money for its operations — a key advantage in the high-volume, low-margin commodities business.

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Isolationism looks ugly on McGuinty – by Christina Blizzard (London Free Press – February 29, 2012)

http://www.lfpress.com/

Why did mining giant Xstrata move its smelter from Timmins
to Quebec? Because the price of electricity in that province
is a fraction of what we pay here….Bay St. was built on
resources like oil, mining and forestry….His latte-loving
lackeys are wrecking rural Ontario with their ruinous green
energy policies… (Christina Blizzard – Toronto Sun)

QMI Agency

Contrary to what Premier Dalton McGuinty said this week, this province has plenty of fossil fuel.

If a giant meteor crashed into his cabinet room today, crushing the dinosaurs there, a million years from now you could sink a well to their fossilized remains and pump out enough Ontario crude to finally pay for all those high-priced programs McGuinty has foisted on us.

Progressive Conservative Leader Tim Hudak accused McGuinty of “playing a game of envy” and “pulling other provinces down” Tuesday, slamming McGuinty’s refusal to back Alberta Premier Alison Redford in her request that this province get more vocal in its support of oilsands development.

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Regulatory clock ticking for Glencore-Xstrata – by Clara Ferreira-Marques and Foo Yun Chee (Toronto Star – February 25, 2012)

The Toronto Star, has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Reuters News Agency

BRUSSELS—Commodities trader Glencore’s takeover of mining group Xstrata will face European Commission antitrust scrutiny, the companies said on Friday, kicking off a global regulatory process that could take months.

In a statement that follows a period of negotiation, the two firms involved in the proposed $90 billion (U.S.) combination said they had agreed to officially notify the commission about the deal.

That notification, once it has been acknowledged by the commission itself, leaves the regulator with 25 days to decide whether to approve, reject or begin an in-depth probe into the plan to create the world’s fourth-largest miner. It is just one of a series of antitrust hurdles the two companies will have to clear.

Some in the industry had expected Glencore and Xstrata to largely sidestep the EU antitrust process—and a possible probe—as Brussels has in the past considered the companies to be a single entity for the purposes of competition rules, given Glencore’s longstanding 34 per cent holding in Xstrata.

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Record Nickel Supply Expanding Glut Thwarts Bull Market Rally: Commodities – by Jae Hur and Ichiro Suzuki Bloomberg.com – February 22, 2012)

www.bloomberg.com

Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year’s rally.

Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That’s equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 7.8 percent to $20,170 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows.

Metals have returned to a bull market from a 22 percent slump last year on an improving outlook for global growth with manufacturing in the U.S. capping the biggest two-month increase in more than two years in January and unexpectedly gaining in China. With new supply expected from Australia to Madagascar to Brazil, consumption still won’t expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain “depressed,” Deutsche Bank AG said in a report Feb. 15.

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[Xstrata and Glencore] Last of the big mining deals – by Peter Koven (National Post – February 8, 2012)

The National Post is Canada’s second largest national paper.

Mick Davis began his discussion of the biggest mining deal in history in an unusual way: by ripping his advisors.

“An advisor is somebody who gives you advice on what you would like to do, and simultaneously advises the market on what you may do through the press,” the blunt chief executive of Xstrata PLC said on a conference call Tuesday.

His feelings are understandable. Thanks to a constant flow of leaks in the European press, the friendly takeover of Xstrata by Glencore International PLC, its key shareholder and the world’s biggest commodity trader, was considered a fait accompli long before it became official this week.

The US$41-billion all-stock deal, announced Tuesday, creates a new dominant player in the mining industry. It will have a market value of about US$90-billion (the fourth biggest overall), and combining Xstrata’s mining operations with Glencore’s extensive knowledge of commodity logistics and trading creates a company with unique expertise across the whole commodity value chain.

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Xstrata-Glencore deal a possible game changer – by David Ebner (Globe and Mail – February 7, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER— The merger of Glencore International PLC and Xstrata PLC has the potential to spark a new wave of deals in the mining industry, particularly among copper producers, some analysts say.

The two companies are expected to announce an $88-billion (U.S.) deal Tuesday that will unite one of the world’s biggest traders of commodities with one of the largest miners of base metals. The new company will be a massive player in resources such as zinc, thermal coal, nickel and copper.

And even though their union has been anticipated for months, even years, the reality of a merged Xstrata-Glencore might be enough to jar others to action.

“There’s a big difference between almost pregnant and pregnant,” said Michael Locker of consulting firm Locker Associates in New York.

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Glencore-Xstrata deal meets shareholder opposition – by Sarah Young and Eric Onstad (Reuters – February 7, 2012)

This article came from: www.reuters.com

LONDON (Reuters) – Two top 10 shareholders in miner Xstrata said on Tuesday they would vote against a takeover by commodities trader Glencore, threatening the industry’s biggest deal to create a powerhouse spanning mining, agriculture and trading.

Standard Life Investments, the fourth largest investor in Xstrata, and Schroders head of UK equities said the deal to buy the remaining 66 percent of Xstrata for $41 billion undervalued their shares.

The two own 3.6 percent of Xstrata, according to Thomson Reuters data. Their statements may persuade others to follow suit and block Glencore’s ambition to create a company to rival mining heavyweights such as BHP Billiton and Rio Tinto.

“I’m in complete agreement with Standard Life and we intend to do exactly the same. This is a fabulous deal for Glencore, it’s probably a great deal for the Xstrata management, but it’s a poor deal for Xstrata’s majority shareholders,” Shroders’ Richard Buxton told Reuters.

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Xstrata agrees $41bn Glencore takeover deal – by Sarah Young and Eric Onstad (Mineweb.com – February 7, 2012)

This article came from: www.mineweb.com

In the biggest merger in the mining sector since Rio and Alcan, Glencore and Xstrata will form a company worth $90bn, Mick Davis will be CEO.

LONDON (Reuters) – Commodities trader Glencore agreed on Tuesday to buy the remaining 66 percent of miner Xstrata for $41 billion in a record deal to create a powerhouse spanning mining, agriculture and trading.

In what has been billed as a merger of equals, Glencore, the world’s largest diversified commodities trading house, and Xstrata will form a company worth $90 billion to rival other mining heavyweights such as BHP Billiton and Rio Tinto.

The new group, which will have mining assets from New Caledonia to the Democratic Republic of Congo, are expected to use their combined clout to look at other deals, including potentially a takeover of Anglo American, analysts say.

“M&A is a space that you’d expect the combined group to be in,” Xstrata chief executive Mick Davis, who will be CEO of the enlarged Glencore, told Reuters.

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Sudbury College officially opens doors of Xstrata Nickel energy centre

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

With the support of a $2 million contribution from Ontario Mining Association member Xstrata Nickel, Cambrian College in Sudbury has officially opened the doors of its new energy research facility.  The Xstrata Nickel Sustainable Energy Centre is home to cutting-edge applied research and education programs for sustainable energy.

Cambrian’s three-year Energy Systems Technology, Environmental Monitoring and Impact Assessment programs will be run out of this 16,000 square foot plus $5-million building.  The centre will also house research facilities to be used by students, entrepreneurs and the general public.

“With this new centre, we are expanding our capacity for applied research and making room for growth,” said Sylvia Barnard, President of Cambrian College. “We are focused on applied research because it gives students in various programs real-life experience working with prototypes and entrepreneurs.”

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How Glencore and Xstrata nailed the $76bn deal – by Danny Fortson (The Australian – February 6, 2012)

This article is from: http://www.theaustralian.com.au/

TUCKED in a corner of the Google bar at Davos, Ivan Glasenberg was in cracking form. Dark and intense, with his hair slicked back, the chief executive of Glencore sipped on a Diet Coke while chatting about mining and waving to acquaintances.

The World Economic Forum’s annual meeting is Glasenberg’s natural habitat. It is stuffed with billionaires — he himself is worth about pound stg. 5 billion ($7.3bn) — and world leaders, whom he courts, and who court him, thanks to his command of the most powerful commodities trader.

There was another, secret, reason for his good humour. Glasenberg was about to clinch a deal he had pursued for five years — a merger between Glencore and Xstrata, the FTSE 100 mining company that he helped create.

The $US82 billion ($76bn) merger, likely to be confirmed on Tuesday in London, is a personal coup for Glasenberg and Mick Davis, his counterpart at Xstrata. It also has profound ramifications for the world economy.

The marriage will unite Glencore’s army of razor-sharp traders — the Goldman Sachs of zinc, copper, iron ore, coal and oil — with Xstrata’s globe-spanning portfolio of mines, stretching from the Australian outback to South Africa and the Peruvian Andes.

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Few changes expected if Xstrata Glencore merger deal goes ahead, union says – by Craig Wong (Winnipeg Free Pres – February 2, 2012)

This article came from: http://www.winnipegfreepress.com/

The Canadian Press

Merger talks that could result the creation of a new European giant in the global mining industry, are being watched carefully in Canada.

A union leader representing 850 mine and smelter workers in Sudbury, Ont., said Thursday he’s doesn’t expect much change if their employer — Xstrata PLC — merges with commodities trader Glencore International PLC.

“The rock ain’t moving,” Richard Paquin, president of the Canadian Auto Workers Local 598, said Thursday.

“For us it is not a new venture,” he said. “It is a matter of co-operating with the new employer if it every happens and trying to get the best we can for our workers.”

He said the Sudbury operation has already been through the uncertainty of Xstrata’s takeover of Canadian nickel and copper producer Falconbridge in 2006 after a takeover battle that lasted nearly two years.

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Fiery CEOs may clash in Glencore-Xstrata talks – by Eric Onstad (Reuters – February 2, 2012)

This article is from: http://www.reuters.com/

(Reuters) – As a tie-up between trader Glencore (GLEN.L) and miner Xstrata (XTA.L) is hammered out in coming days there is plenty of scope for hard bargaining between the two sides’ highly competitive South African bosses.

Glencore’s Ivan Glasenberg and Xstrata’s Mick Davis — both hard-driven, keen sportsmen who climbed the corporate ladder in the South African coal industry — have had a close and sometimes tense relationship for more than a decade. Glasenberg hand-picked Davis to run Xstrata 11 years ago. Xstrata floated in 2002, after buying up key Glencore coal assets, leaving the trader with a 34 percent stake.

“They clearly have a history together, as do Xstrata and Glencore, and I would expect nothing less than that they try to drive the best bargain for their shareholders,” said analyst Jeff Largey at investment bank Macquarie in London.

One key element of Glencore’s move on Xstrata — which is being billed as a “merger of equals” — is who gets to run the enlarged trader and miner.

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Glencore, Xstrata target powerhouse mining merger – by Eric Reguly (Globe and Mail – February 3, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME—The pending marriage of Xstrata PLC and Glencore International PLC would create a mining powerhouse with both the muscle and the appetite to quickly gobble up smaller rivals.

Xstrata, which owns Canada’s Falconbridge Ltd., is in talks with part-owner Glencore aimed at an all-stock merger that would reshape the industry by uniting what is already a formidable miner with the world’s biggest commodities trader.

Xstrata said Thursday it was approached by Glencore, which already holds 34 per cent of the Anglo-Swiss miner. If a deal is struck, a giant with a market value of about $88-billion (U.S.) would be created overnight.

Both companies are run by forceful chief executive officers, both are deal-making machines on their own, and together would be a formidable takeover force that analysts believe could target companies whose market value is at least $10-billion. In its own right, it would be huge in zinc, thermal coal, nickel and copper.

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Glencore in talks to buy Xstrata in blockbuster deal – by Clara Ferreira-Marques and Victoria Howley, Reuters (Sudbury Star – February 3, 2012)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

LONDON — Commodities trader Glencore is in talks to buy mining group Xstrata in an all-share transaction that could create a combined group worth more than 50 billion pounds (US$79 billion), shaking up the industry with its biggest deal to date.

Glencore, the world’s largest diversified commodities trader, already owns 34% of Xstrata and a tie-up between the two — a deal which would trump Rio Tinto’s $38 billion acquisition of Alcan in 2007 — has long been expected, as Glencore aims to add more mines to its trading clout.

“We’ve always had the belief these two companies should be together,” Glencore Chief Executive Ivan Glasenberg told a financial conference in Moscow. Xstrata owns Xstrata Nickel, which in Sudbury employs about 1,000 people who work at Nickel Rim South mine, Fraser Mine, a mill and a smelter.

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Xstrata confirms Glencore merger of equals talks – by Elisabeth Behrmann and Jesse Riseborough (Mineweb.com – February 2, 2012)

This article is from: www.mineweb.com

In a statement issued this morning, and subsequently confirmed by Glencore, Xstrata said the commodities trader has made an approach about an all-share offer for “a merger of equals.”

(Bloomberg)  –  Glencore International Plc, the world’s largest publicly traded commodities supplier, is in talks to buy the shares in Xstrata Plc that it doesn’t already own to add coal, copper and nickel mines from Africa to Asia.

Glencore made an approach about an all-share offer for “a merger of equals,” Zug, Switzerland-based Xstrata said today in a statement to the London stock exchange. Glencore holds 34 percent and the rest of the company is valued at 21.9 billion pounds ($35 billion) based on yesterday’s closing price. Glencore said in a statement there’s no certainty of an offer.

Joining Xstrata with Glencore, located two miles away in Baar, would reunite two groups that separated a decade ago when Xstrata bought Glencore’s Australian and South African coal mines for $2.5 billion and went public in London. The combined company may be valued at about 52 billion pounds after excluding Glencore’s stake in Xstrata.

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